James Briggs, sales director of Blu Debt management said, “Many debt management firms are offering what appears to be high commission to advisers who introduce their clients with debt problems, but many of these same companies don’t actually manage to get interest and charges stopped by lenders and credit card companies.
“If a debt management company is not pro-active in negotiating with and responding to creditors, the creditors may reject the proposed debt management plan and struggling borrowers can find themselves in a worse position financially. This can be damaging not only to the borrower but to the reputation of the adviser who referred the borrower to the debt management company in the first place.”
Blu Debt Managements’ current creditor acceptance rate is 92%; this means that 92% of all borrowers’ accounts that advisers have introduced have been accepted, this is well in excess of what is believed to be the industry average of 75%.
Total consumer debt is £1,500 billion according to latest Government figures, but only a small proportion of the people who need it are receiving good quality debt management advice.
The Government declared last week that, one in ten people in the UK are struggling to manage their debts and the growing demand for debt advice is outstripping the Government’s capacity to provide it. As a result Edward Leigh MP, chairman of the Committee of Public Accounts, said the Government “Must work with those in the public, private and third sectors who provide debt advice, to do all that they can to make good quality guidance available for those who need it."
James Briggs stated, “We believe that too many debt management companies are piling on business at the front end without competently managing and retaining existing clients. At a time when the Government is highlighting the need for an increase in good quality debt management advice, it is essential that debt management companies are open about these figures so that advisers can get the best possible debt management help for their clients.”
